The COVID-19 pandemic caused a negative impact on the market as several activities in power projects including the T&D sector were postponed for 2021 or 2022. Factors such as increasing diversification of energy sources from oil and gas to cleaner energy sources such as solar, wind, and bioenergy are expected to drive the Saudi Arabia power market during the forecast period. However, the unstable geopolitics of the region is expected to act as a restraint for the market's growth.



Saudi Arabia's power generation mix is majorly dominated by thermal power sources such as oil and natural gas. The same trend is expected to continue during the forecast period owing to the abundance of fossil fuel resources and upcoming power generation plants in the country.


Privatization of the power sector is expected to provide a significant opportunity, and if the government capitalizes on this opening, it is expected to help with large investments that are needed for the reformation of the power sector and provide the country with the expertise required to generate renewable energy at lower costs.


The increasing renewable energy share and capacity in the country's energy mix is expected to drive the Saudi Arabia power market during the forecast period.



Key Market Trends

Thermal Power Generation to Dominate the Market



The thermal sources for the country include crude oil and natural gas. In 2019, 355.6 Terawatt-Hours (TWh) of electricity was produced from conventional thermal, which accounted for 99.5% of the total electricity generated.


The country's power generation is highly dependent on hydrocarbons, which are present in abundance in the country. At the end of 2019, the country had 40.9 billion tonnes of crude oil proven reserves and was second after Venezuela. In the same year, the country's total gas reserves were 211.3 Trillion cubic feet (Tcf), which ranked eight globally.


In recent years the country saw an increase in electricity generation from gas-fired power plants while the country experienced a down-fall in power generation from crude oil. This transition was seen due to countries' global movement shifting to cleaner energy sources of energy. In 2019, electricity generation from oil was 149.6 Twh, while power generation from natural gas was 206 Twh.


In February 2019, Fadhili gas-powered combined heat and power plant started operation in its first two gas turbines. The project owner Fadhili Plant Cogeneration Company (FPCC), is a particular purpose vehicle consisting of Saudi Aramco (SA), Saudi Electricity Company (SEC), and the Engie Energy International (EEI). The plant has a total electricity generation capacity of 1519 megawatts (MW). The power plant's primary fuel is a low BTU gas, which is being provided by Saudi Aramco’s Fadhili Gas Processing Plant. The back-up fuel is a grid sales gas from Aramco’s Fadhili Gas Processing Plant.


Therefore, owing to the aforementioned factors, the thermal power segment is likely to dominate the Saudi Arabia power market during the forecast period.


Development of Renewable Energy Sector to Drive the Market



The country has witnessed a sharp rise in its renewable energy capacity in 2019, mainly driven by the increasing focus on environmental concerns. The total renewable energy installed capacity in 2018 was 87 MW, which in 2019 exponentially increased to 397 MW.


One of the driving reasons for renewable to increase at such a rate the country is its plan to reduce oil and gas usage in power generation and use it for more export of hydrocarbons from the country, thus lowering its CO2 emissions.


In 2017, the country launched its National Renewable Energy Program (NREP), a strategic initiative under Vision 2030 and King Salman's Renewable Energy Initiative. The program aims to maximize the potential of renewable energy in the country. In January 2020, the country launched the third round of NREP. Round Three was comprised of four Solar PV projects with a combined generation capacity of 1,200 megawatts (MW).


In November 2019, ACWA Power announced the Sakaka Solar PV Plant's successful connection, the first renewable energy project in Saudi Arabia, to the national grid.


In 2019, Masdar and EDF Renewables won the tender for the Dumat Al Jandal wind farm in Saudi Arabia. The project is likely to have an installed capacity of 400 megawatts (MW) and will be Saudi Arabia’s first wind farm. The project is expected to be complete and operational by 2022.


Therefore, owing to the above points, the increasing renewable energy installations and investments in the country are expected to drive the Saudi Arabia power market during the forecast period.


Competitive Landscape

The Saudi Arabia power market is fragmented. Some of the major players operating in this market include ACWA Power, Saudi Electricity Company (SEC), Power and Water Utility Company (MARAFIQ), Arabian Electrical Transmission Line Construction Company (AETCON), and Nour Energy (ASTRA Group).

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